Berger on the CBA Talks (The Big Lockout Thread) (Farewell to the Lockout and the Thread, p. 259)
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PostPosted: Mon Jun 20, 2011 12:43 pm    Post subject:

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been talking to several connected people who say the NBA "is very optimistic" that they will have a deal done in the coming weeks.
http://twitter.com/TommyDeeTKB/status/82905031778643969

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PostPosted: Mon Jun 20, 2011 12:43 pm    Post subject:

Aeneas Hunter wrote:
composite wrote:
But remember, the players aren't collectively forcing owners to spend $$. It's individual owners that are offering these salaries. Ultimately, owners are trying to protect themselves from other owners. So, why is it the players' responsibility to limit their own salaries?


That's one of the things that rankles me about US sports owners. They've managed to convince a lot of people that things must be this way in order for a sports league to survive. But if you look across the pond, you'll find soccer leagues that do just fine without salary caps. Those leagues have their own set of problems -- most notably a lack of parity -- yet they somehow manage to thrive without sports socialism. If someone spends too much money (hello, Leeds United), they go bankrupt and everyone laughs at them.


I think it's fascinating that there's never been an NBA "strike", but rather there will now be two "lockouts" within the last 15 years. Basically, in reality, owners are trying to cram the players.

But the reality is, unless the players' union can win through the courts or another viable league offering competitive salaries is formed (i.e., Europe), then the issue is whether the players' unions can simply outlast the owners or not.

Considering that many owners view NBA franchise ownership as a side venture (e.g., Paul Allen, Cuban, James Dolan, etc.), it's hard to imagine the players being able to outlast the owners.
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PostPosted: Mon Jun 20, 2011 12:53 pm    Post subject:

BobbyJ wrote:
Quote:
been talking to several connected people who say the NBA "is very optimistic" that they will have a deal done in the coming weeks.
http://twitter.com/TommyDeeTKB/status/82905031778643969


I have no idea who Tommy Dee is, but I hope he's right.
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PostPosted: Mon Jun 20, 2011 12:58 pm    Post subject:

Aeneas Hunter wrote:
BobbyJ wrote:
Quote:
been talking to several connected people who say the NBA "is very optimistic" that they will have a deal done in the coming weeks.
http://twitter.com/TommyDeeTKB/status/82905031778643969


I have no idea who Tommy Dee is, but I hope he's right.


Never heard of him either. I got his twitter feed through HoopHypes.com.

This is his Bio on his Twitter account:
Quote:
husband; Marketing Editor at pLot Commerce and the powerhouse that will be CHARGED MAGAZINE; founder TheKnicksBlog SNY.tv ; part-time NBA Scout
.

Here is his website listed on his Twitter account.
http://www.theknicksblog.com/
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PostPosted: Mon Jun 20, 2011 1:00 pm    Post subject:

Aeneas Hunter wrote:
That's one of the things that rankles me about US sports owners. They've managed to convince a lot of people that things must be this way in order for a sports league to survive.


I was wondering about how owners have convinced the public about salary disputes. I think players have an uphill battle w/ public opinion. At the end of the day, they "play" a child's game which everyone can participate. They're not building a company like Microsoft or engaging in some other activity where the public "respects" the income made by the participants. They're simply playing a child's game that we all participate, they're just much better at it than most people. For most people, it's hard to believe that they should be paid so much $$ for that.
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PostPosted: Mon Jun 20, 2011 1:09 pm    Post subject:

LarryCoon wrote:
1since71 wrote:
you see stern saying they gave the players thier guarented contract request.reality is they gave nothing players already have this right.


Said "right" ending June 30.

That said, look at this as a scale from -10 to 10, with 0 being where we're at right now. A deal 100% in favor of the owners would be -10, and 100% in favor of the players would be 10. Again, 0 is what we have right now.

The deal is going to end up somewhere between 0 and -10. The players' starting position is where we are right now, or 0. The area of the scale between 0 and 10 is simply not going to be a part of this discussion.

The only thing being negotiated is how far in the negative numbers they're going to end up -- i.e., how much the players will have to give up. Not giving up guaranteed contracts is a (small) win for them -- even though they have them in the current agreement.

It's an ancillary issue from a league-wide perspective, but important to the players from an individual perspective. Given this, it's a reasonable thing for the owners to have given back at this stage of the negotiations. The owners have more of a big-picture and long-term perspective than the players do (for obvious reasons).

But it does signal that they won't actually end up with a hard cap (which I already suspected). You can't have high salaries, guaranteed contracts and a hard cap at the same time. Even with a salary rollback, you'll quickly reach a point where something's gotta give. If they were going to be adamant about a hard cap, then they would have stuck to their guns on guarantees.


Agreed. I think the overall number is the main part of that 0 to -10 scale.

The players are at 2.1 billion now, that's the 0. By all accounts that would move to at least 50% so 1.84 billion is the owners worst case in theirs minds. Offered 1.35 billion, that's the -10. It will end up somewhere between those two numbers 1.35-1.84, with the owners trading guar. contracts and other things for landing below the 1.84 figure. The owners also want a few other gimmes but those should not be deals breakers.
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PostPosted: Mon Jun 20, 2011 1:49 pm    Post subject:

Aeneas Hunter wrote:
That's one of the things that rankles me about US sports owners. They've managed to convince a lot of people that things must be this way in order for a sports league to survive.



The truth is even if every franchise never made any profit there would still be rich people who would buy it as a toy. Anyone think Mark Cuban would really care if he lost $10 million a year on the Mavericks?


composite wrote:
I was wondering about how owners have convinced the public about salary disputes. I think players have an uphill battle w/ public opinion. At the end of the day, they "play" a child's game which everyone can participate. They're not building a company like Microsoft or engaging in some other activity where the public "respects" the income made by the participants. They're simply playing a child's game that we all participate, they're just much better at it than most people. For most people, it's hard to believe that they should be paid so much $$ for that.




Based on this reasoning, JK Rowling shouldn't make so much money from the Harry Potter books -- after all, she's just writing words on paper, which most of us can do in elementary school. The money should go to the publisher, because they wear suits and go to an office everyday!

Based on this reasoning, Jerry Seinfeld shouldn't make much of the money if he sells out Staples for a concert. After all, he just tells jokes -everybody can tell a joke.

And why should Lady Gaga make money off her records. I was singing in grade school too. Anyone can sing. In fact there are more people who can sing than can dunk a basketball.

It's funny that sports fans happily pay all these money, in one way or another, to watch players play, and yet they think the money should go to someone other than the players who are entertaining them.
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PostPosted: Mon Jun 20, 2011 2:09 pm    Post subject:

activeverb wrote:
Aeneas Hunter wrote:
That's one of the things that rankles me about US sports owners. They've managed to convince a lot of people that things must be this way in order for a sports league to survive.



The truth is even if every franchise never made any profit there would still be rich people who would buy it as a toy. Anyone think Mark Cuban would really care if he lost $10 million a year on the Mavericks?


composite wrote:
I was wondering about how owners have convinced the public about salary disputes. I think players have an uphill battle w/ public opinion. At the end of the day, they "play" a child's game which everyone can participate. They're not building a company like Microsoft or engaging in some other activity where the public "respects" the income made by the participants. They're simply playing a child's game that we all participate, they're just much better at it than most people. For most people, it's hard to believe that they should be paid so much $$ for that.




Based on this reasoning, JK Rowling shouldn't make so much money from the Harry Potter books -- after all, she's just writing words on paper, which most of us can do in elementary school. The money should go to the publisher, because they wear suits and go to an office everyday!

Based on this reasoning, Jerry Seinfeld shouldn't make much of the money if he sells out Staples for a concert. After all, he just tells jokes -everybody can tell a joke.

And why should Lady Gaga make money off her records. I was singing in grade school too. Anyone can sing. In fact there are more people who can sing than can dunk a basketball.

It's funny that sports fans happily pay all these money, in one way or another, to watch players play, and yet they think the money should go to someone other than the players who are entertaining them.


I agree with what you said, but unfortunately the majority of the public still adheres to the the "overpaid athlete" stereotype.

The ESPN comments almost overwhelmingly favor ownership whenever I read articles related to both of the lockouts.

It's unfortunate but Joe Six-pack doesn't think of these things on the level that is being discussed here.
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PostPosted: Mon Jun 20, 2011 2:51 pm    Post subject:

I'll give my analysis based on Aeneas' argument:

The franchise value itself should not be part of the equation - just as Players don't have to risk depreciation of a franchise (nor the risks associated with acquiring financing for a franchise), the players should not be able to gain from an increase in value of a franchise either. Further, owners should also not be able to use any temporary depreciation in the league's franchises' values nor any interest paid on loans as part of the league's annual liabilities. As such, neither the losses or gains in franchise value, interest on loan nor risks associated with lending should be part of the equation in regards to a revenue split.

Next it comes down to how to calculate the annual liabilities/costs. I would include employee (non-player) salaries (including coaches, staff, trainers, and all employees of a franchise without an interest share), advertising costs, rental/leasing costs and/or maintenance costs (if they own the arena), advertising costs, travel costs (planes, busses, hotels, players stipends, etc.) and general expenses (office supplies, utility bills, etc.) Lets say, as Aeneas estimated, that would mean $50 million per team, or $1.5 billion in annual costs/liabilities league round.

Further, although I understand the concept of providing a premium to the owners for fronting all the costs (something the players aren't burdened with), I don't think a premium is justified. The owners get that money paid back guaranteed before splitting net revenues, so they aren't really sacrificing much and don't need to be rewarded for fronting the money. It's not like that money is put up all at once anyway - the owners are consistently getting paid back at the same time they are spending it.

So, let's say the gross annual revenues = $3.7 billion and annual liabilities/costs of the league = $1.5 billion. That leaves $2.2 billion in net revenues (or profit). I would then apply a 50/50 split, leaving both sides with $1.1 billion and turn that into a hard cap by dividing that $1.1 billion among all 30 teams. If that math is right, it would leave the league with a hard cap of about $37 million per team and a profit for each team of $37 million.

I must be missing something though - if I'm not, it would mean a pretty large reduction in player salaries (nearly a 40% reduction league wide).
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PostPosted: Mon Jun 20, 2011 2:54 pm    Post subject:

Aeneas Hunter wrote:


golakersgo121 wrote:
In any case - the question on hands you simply don't want to answer. Forget for a second about any and all expenses associated with purchasing franchise. Lets' assume - they are NOT part of this calculation.

And thus here is our pie. Total basketball related revenues minus basketnall related expenses (depreciation and ammortization related to acquisition are not part of it - as well as financing associated with acquisition). What is a fair split to YOU? Sanity expressed his opinion - 50/50.

And yours?


I wouldn't approach it that way at all. I'd start by calculating the actual operating expenses of the league other than player salaries and benefits. This includes everything needed to present the product, from marketing to hiring coaches to leasing arenas to providing team transportation . . . all of the actual costs needed to present the league's product.

That's the baseline. It represents what the owners actually contribute to the product. At an absolute minimum, they're entitled to get that much back out of the pot of revenue. If they aren't (which may be the case right now), then they're entitled to an adjustment.

The question then becomes how much of a premium should the owners receive on their contribution. 10%? 20%? Something like that would be reasonable. The point is that the premium should relate to the operating outlays, not to the bloated franchise prices.

Let's try some hypothetical numbers. Let's assume that the average franchise has $50M in operating expenses as I've defined that term. That may actually be a little high, but this is hypothetical. That's $1.5B over 30 teams. Give the owners a 10% premium, and that's $1.65B. Give them 20%, and that's $1.8B. Total revenues for 2010 were a little over $3.7B, and they are supposed to be up for 2011.

Now consider the 50/50 split in the owners' proposal. The owners would get $900M plus $1.4B, for a total of $2.3B. That's about a 53% premium using my hypothetical numbers.

Let me stress again that these numbers are hypothetical and are presented just to provide context. I am not saying that my numbers prove that the players should get any particular percentage. I'm just telling you how I would do it and providing an illustration.


I understand the logic you're using (understand but disagree). It is interesting though - how you "divide" on "what owners contribute to the product" identifying them as operating expenses. So - in your opinion, adding players' salaries (aren't they paid up by the owners) to that expense and thus increasing what you call a "premium" owners "deserve" would be wrong

BTW - premium that you described at 10% on top of operating expenses is ~$5mln per team. In other words - owners "can" make operating profit below whar is today MLE for a player (average for all franchises).

I'd call it laughable. Using, lets' say, the same 2010 number and getting back to Sanity question: how would you split net revenues?

Your answer is (the way i understand it) as following. The net income is about $2.2 billion.

If we "give" the owners your 10% of op expense number - they'd get $150mln, the players would get $2.05 billion (owners 7% of the remaing pie, players - 93%).

We can get generous and "give" the owners 20% of the op expense. Then the owners get $300mln, the players - $1.9 billion (14-86 split).

Wow... Is it a reason you didn't want "to approach it that way at all"?
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PostPosted: Mon Jun 20, 2011 2:59 pm    Post subject:

LakerSanity wrote:
I'll give my analysis based on Aeneas' argument:

The franchise value itself should not be part of the equation - just as Players don't have to risk depreciation of a franchise (nor the risks associated with acquiring financing for a franchise), the players should not be able to gain from an increase in value of a franchise either. Further, owners should also not be able to use any temporary depreciation in the league's franchises' values nor any interest paid on loans as part of the league's annual liabilities. As such, neither the losses or gains in franchise value, interest on loan nor risks associated with lending should be part of the equation in regards to a revenue split.

Further, although I understand the concept of providing a premium to the owners for fronting all the costs (something the players aren't burdened with), I don't think a premium is justified. The owners get that money paid back guaranteed before splitting net revenues, so they aren't really sacrificing much and don't need to be rewarded for fronting the money. It's not like that money is put up all at once anyway - the owners are consistently getting paid back at the same time they are spending it.

So, let's say the gross annual revenues = $3.7 billion and annual liabilities/costs of the league = $1.5 billion. That leaves $2.2 billion in net revenues (or profit). I would then apply a 50/50 split, leaving both sides with $1.1 billion and turn that into a hard cap by dividing that $1.1 billion among all 30 teams. If that math is right, it would leave the league with a hard cap of about $37 million per team and a profit for each team of $37 million.

I must be missing something though - if I'm not, it would mean a pretty large reduction in player salaries (nearly a 40% reduction league wide).


You are not missing anything, Sanity. It is just the fact that it is, indeed, entertainment industry and 50% split while looks "fair" is not "fair" really. Hint: It is closer to 25% min for the owners - that's where "fair" territory starts for this business model...
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PostPosted: Mon Jun 20, 2011 3:08 pm    Post subject:

^All I am saying is that if I can gaurantee that every franchise is going to make a profit, after expenses, of $30+ million per year, that seems fair to me. Just my own values.

Unlike NBA players, there is a different supply/demand analysis with basketball. Brad Pitt can make three movies per year, so can the other stars out there. They are all interchangeable from movie to movie and studio to studio. The same can't be said for a Kobe Bryant - he can't play for two teams simultaneously, nor can he be replaced so easily. That makes Kobe way more valuable than the average "entertainer" and it also restricts his ability to find other sources of income within his profession. As such, it is what justifies to me a larger share of the pie for athletes than with other forms of entertainment (such as movies and music). Although, I do think musicians gets shafted, much more than movie stars.
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PostPosted: Mon Jun 20, 2011 3:33 pm    Post subject:

activeverb wrote:
Aeneas Hunter wrote:
That's one of the things that rankles me about US sports owners. They've managed to convince a lot of people that things must be this way in order for a sports league to survive.



The truth is even if every franchise never made any profit there would still be rich people who would buy it as a toy. Anyone think Mark Cuban would really care if he lost $10 million a year on the Mavericks?


composite wrote:
I was wondering about how owners have convinced the public about salary disputes. I think players have an uphill battle w/ public opinion. At the end of the day, they "play" a child's game which everyone can participate. They're not building a company like Microsoft or engaging in some other activity where the public "respects" the income made by the participants. They're simply playing a child's game that we all participate, they're just much better at it than most people. For most people, it's hard to believe that they should be paid so much $$ for that.




Based on this reasoning, JK Rowling shouldn't make so much money from the Harry Potter books -- after all, she's just writing words on paper, which most of us can do in elementary school. The money should go to the publisher, because they wear suits and go to an office everyday!

Based on this reasoning, Jerry Seinfeld shouldn't make much of the money if he sells out Staples for a concert. After all, he just tells jokes -everybody can tell a joke.

And why should Lady Gaga make money off her records. I was singing in grade school too. Anyone can sing. In fact there are more people who can sing than can dunk a basketball.

It's funny that sports fans happily pay all these money, in one way or another, to watch players play, and yet they think the money should go to someone other than the players who are entertaining them.

It is certainly an amazingly successful ongoing propaganda campaign. Everyone values the wallets of the multibillionaire owners who they have almost no interaction with to the wallets of the millionaire players who they get all of their entertainment from. Great job by the billionaires to turn the public completely in their favor.
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PostPosted: Mon Jun 20, 2011 3:33 pm    Post subject:

LakerSanity wrote:
^All I am saying is that if I can gaurantee that every franchise is going to make a profit, after expenses, of $30+ million per year, that seems fair to me. Just my own values.

Unlike NBA players, there is a different supply/demand analysis with basketball. Brad Pitt can make three movies per year, so can the other stars out there. They are all interchangeable from movie to movie and studio to studio. The same can't be said for a Kobe Bryant - he can't play for two teams simultaneously, nor can he be replaced so easily. That makes Kobe way more valuable than the average "entertainer" and it also restricts his ability to find other sources of income within his profession. As such, it is what justifies to me a larger share of the pie for athletes than with other forms of entertainment (such as movies and music). Although, I do think musicians gets shafted, much more than movie stars.


$30 mln number per franchise seems fair to me as well. It won't look "fair" to the players though as it would mean (in your terms) 40-60 split of the net operating income and their portion in 2010 $$$ would become $1.3 billion. Going further into 50-50 split territory is simply unrealistic, IMHO.

However, I do consider 25-75 split in the new CBA as realistic to be achieved by the owners. Yes, it would make an operating profits figure per team at under $20 mln. But the fight with the players will be huge
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PostPosted: Mon Jun 20, 2011 4:25 pm    Post subject:

Laker_Behemoth wrote:
activeverb wrote:
Aeneas Hunter wrote:
That's one of the things that rankles me about US sports owners. They've managed to convince a lot of people that things must be this way in order for a sports league to survive.



The truth is even if every franchise never made any profit there would still be rich people who would buy it as a toy. Anyone think Mark Cuban would really care if he lost $10 million a year on the Mavericks?


composite wrote:
I was wondering about how owners have convinced the public about salary disputes. I think players have an uphill battle w/ public opinion. At the end of the day, they "play" a child's game which everyone can participate. They're not building a company like Microsoft or engaging in some other activity where the public "respects" the income made by the participants. They're simply playing a child's game that we all participate, they're just much better at it than most people. For most people, it's hard to believe that they should be paid so much $$ for that.




Based on this reasoning, JK Rowling shouldn't make so much money from the Harry Potter books -- after all, she's just writing words on paper, which most of us can do in elementary school. The money should go to the publisher, because they wear suits and go to an office everyday!

Based on this reasoning, Jerry Seinfeld shouldn't make much of the money if he sells out Staples for a concert. After all, he just tells jokes -everybody can tell a joke.

And why should Lady Gaga make money off her records. I was singing in grade school too. Anyone can sing. In fact there are more people who can sing than can dunk a basketball.

It's funny that sports fans happily pay all these money, in one way or another, to watch players play, and yet they think the money should go to someone other than the players who are entertaining them.

It is certainly an amazingly successful ongoing propaganda campaign. Everyone values the wallets of the multibillionaire owners who they have almost no interaction with to the wallets of the millionaire players who they get all of their entertainment from. Great job by the billionaires to turn the public completely in their favor.



The reason is because most fans don't think of the owners. They think of the money going to a company. If you made the question, should the money go to Donald Sterling or Blake Griffith, or should the money go to LaMarcus Aldridge or one of the already richest men in the world, Paul Allen, you get a different answer.

Basically, I think fans get pissed off at the notion of either players or owners getting the money, but they can forget about the owners easier than the players.
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PostPosted: Mon Jun 20, 2011 4:32 pm    Post subject:

LakerSanity wrote:
So, let's say the gross annual revenues = $3.7 billion and annual liabilities/costs of the league = $1.5 billion. That leaves $2.2 billion in net revenues (or profit). I would then apply a 50/50 split, leaving both sides with $1.1 billion and turn that into a hard cap by dividing that $1.1 billion among all 30 teams. If that math is right, it would leave the league with a hard cap of about $37 million per team and a profit for each team of $37 million.


That may strike you as fair, but I think you can also see the problem. The players are the product.
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PostPosted: Mon Jun 20, 2011 4:46 pm    Post subject:

LakerSanity wrote:
^All I am saying is that if I can gaurantee that every franchise is going to make a profit, after expenses, of $30+ million per year, that seems fair to me. Just my own values.

Unlike NBA players, there is a different supply/demand analysis with basketball. Brad Pitt can make three movies per year, so can the other stars out there. They are all interchangeable from movie to movie and studio to studio. The same can't be said for a Kobe Bryant - he can't play for two teams simultaneously, nor can he be replaced so easily. That makes Kobe way more valuable than the average "entertainer" and it also restricts his ability to find other sources of income within his profession. As such, it is what justifies to me a larger share of the pie for athletes than with other forms of entertainment (such as movies and music). Although, I do think musicians gets shafted, much more than movie stars.


It's virtuous impossible to put a true value on these things.

How much income does an individual player in a team sport personally generate -- economists have been trying to figure this out without success for years.

Actors are tough too. The additional advantage an actor has is that each film is, in essence, an independent company, and if the "company" is unable to land a big-enough actor the film doesn't get made. So, apart from however much income their skills generate, the top actors are responsible for the business (ie, the individual film) being able to exist.

Musicians -- at least individual performers like Lady Gaga -- are easier to judge because when they give a concert or produce a record, they are pretty much the main element responsible for the sales that are produce. That isn't necessarily the case with individual basketball players or actors.
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PostPosted: Mon Jun 20, 2011 5:23 pm    Post subject:

golakersgo121 wrote:
I understand the logic you're using (understand but disagree). It is interesting though - how you "divide" on "what owners contribute to the product" identifying them as operating expenses. So - in your opinion, adding players' salaries (aren't they paid up by the owners) to that expense and thus increasing what you call a "premium" owners "deserve" would be wrong


Why the owners be entitled to a premium for giving the players their slice of the pie? The owners deserve a reasonable premium for organizing, marketing, and exhibiting the product. That's their function in the enterprise. But a premium for cutting checks to the players? I don't see the logic in that.

golakersgo121 wrote:
BTW - premium that you described at 10% on top of operating expenses is ~$5mln per team. In other words - owners "can" make operating profit below whar is today MLE for a player (average for all franchises).


That's more than they're making now, and there is no shortage of people lining up to buy NBA teams. If 10% seems too low, go with 20%. The question is what is a reasonable premium for what the owners are actually providing. If that isn't good enough, someone will buy their teams and do it.

golakersgo121 wrote:
Your answer is (the way i understand it) as following. The net income is about $2.2 billion.

If we "give" the owners your 10% of op expense number - they'd get $150mln, the players would get $2.05 billion (owners 7% of the remaing pie, players - 93%).

We can get generous and "give" the owners 20% of the op expense. Then the owners get $300mln, the players - $1.9 billion (14-86 split).

Wow... Is it a reason you didn't want "to approach it that way at all"?


The players get more than that right now. Under the current system, the players would get just over $2.1M (57% of $3.7B). The owners agreed to that in 2005. Revenues have gone up since 2005.

The players are the product. They aren't fungible, as the NFL learned in the '80s. While the owners and the league certainly contribute to the success of the product, the league is nowhere without having the best basketball players in the world.

Here's something for you to consider, which may not have occurred to you. If we had no CBA, and the teams had to freely compete, the players would make more than $2.1M. We know this because, every year under the current CBA, actually salaries exceeded 57% of BRI. The owners recovered the overage from the escrow accounts. The overage totaled over $800M in the first five years of the current CBA, and it may reach $1B when the 2011 numbers are calculated. Under a free market system, the owners would willingly pay the players more than they get under a CBA.

As Composite says quite accurately, the owners are bargaining for protection from themselves. The players get benefits, too, such as minimum salaries and non-salary benefits. However, the primary focus of the CBA is to place limits on how much teams can spend and how much players can make.

So why should the players agree to ship massive amounts of money to the owners, when the owners would willingly give that money to the players in a free market system?

This is why I don't approach the issue in the manner that LS suggests. It is fair that the owners should recover their operating expenses. It is fair that the owners should get a reasonable premium on those operating expenses. In a negotiation between entertainers and organizers, that's what is at issue. If this was a high risk proposition, then the owners could argue for a higher premium. But in fact it's a low risk proposition once you stipulate that the system needs to insure that the owners will recover their operating expenses plus a premium. The actual risk comes from the fact that the owners have paid absurd amounts of money for their teams and are dependent on the greater fool principle to recover their franchise investments, but I've already addressed that.

It's not fair to stiffle the free market system so that the owners can make a big pile of money. LS says that the owners should get a $37M premium on a $50M outlay. Yet the owners would willingly operate at a loss in a free market system. And they'd sell their franchises at a profit to greater fools, which is precisely what has happened during the years of the current CBA.
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PostPosted: Mon Jun 20, 2011 5:32 pm    Post subject:

Quote:
NEW YORK -- Just a prediction here, but one based upon experience from having covered numerous NBA labor battles in the past.

On Tuesday, the players are expected to make a new offer to the owners when the sides meet for what commissioner David Stern has said will be the most important collective bargaining session yet.

And whether the players give a little or give a lot, past performance metrics show that Stern will likely put that give in his pocket and walk away from the meeting saying some variation of the phrase: "It isn't enough," thereby pushing the pessimism pedal to something approaching full throttle.


http://espn.go.com/blog/truehoop/post/_/id/30522/what-to-expect-in-tuesdays-nba-labor-talks
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PostPosted: Mon Jun 20, 2011 5:39 pm    Post subject:

Laker_Behemoth wrote:
It is certainly an amazingly successful ongoing propaganda campaign. Everyone values the wallets of the multibillionaire owners who they have almost no interaction with to the wallets of the millionaire players who they get all of their entertainment from. Great job by the billionaires to turn the public completely in their favor.


Actually, I've been struck by the extent to which the public is NOT completely on the side of the owners in the case of the NFL lockout. In the past, sentiment has usually been something like 99 to 1 against the players. This time, the majority are siding with the owners, but it's not anywhere near as one sided as in the past.

I think there are three factors that contribute to this. First, it's a lockout and not a strike. The owners and not the players are perceived as the aggressors. Second, the players are not demanding more money, but instead the owners are demanding pay cuts. The media has reported the issues with reasonable clarity. Third, the owners have burned a lot of PR capital by extorting new stadiums and arenas from cities across the country.

The sort of comment I get from casual sports fans is something along the lines of "Players make too much money, but I don't understand why these people can't work things out." That's different from what you would have heard during prior labor disputes.

The NBA situation hasn't really entered the consciousness of the sports public up to this point. I'll be interested to see how the public reacts if there is a lockout.
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PostPosted: Mon Jun 20, 2011 5:42 pm    Post subject:

BobbyJ wrote:
Quote:
NEW YORK -- Just a prediction here, but one based upon experience from having covered numerous NBA labor battles in the past.

On Tuesday, the players are expected to make a new offer to the owners when the sides meet for what commissioner David Stern has said will be the most important collective bargaining session yet.

And whether the players give a little or give a lot, past performance metrics show that Stern will likely put that give in his pocket and walk away from the meeting saying some variation of the phrase: "It isn't enough," thereby pushing the pessimism pedal to something approaching full throttle.


http://espn.go.com/blog/truehoop/post/_/id/30522/what-to-expect-in-tuesdays-nba-labor-talks


That whole article by Sheridan is pretty good.
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PostPosted: Mon Jun 20, 2011 5:54 pm    Post subject:

Aeneas Hunter wrote:
LakerSanity wrote:
So, let's say the gross annual revenues = $3.7 billion and annual liabilities/costs of the league = $1.5 billion. That leaves $2.2 billion in net revenues (or profit). I would then apply a 50/50 split, leaving both sides with $1.1 billion and turn that into a hard cap by dividing that $1.1 billion among all 30 teams. If that math is right, it would leave the league with a hard cap of about $37 million per team and a profit for each team of $37 million.


That may strike you as fair, but I think you can also see the problem. The players are the product.


But doesn't it seem a bit jarring that a single player can take home more money each year than the franchise does as a whole? If Kobe made $20 million last year and the entire Lakers' franchise made $20 million, does that seem fair? Especially considering that not all of that $20 million goes to Dr. Buss, but his partners as well?

You could say "well, even if the owners aren't making more on an annual basis, they are making up for it in the increase of franchise value." Are they really? What if any owner never sells? What if the NBA disappears or starts losing fan fair? Will it be fair that a player makes $200 million over his career for a franchise, but when the owner finally sells that same franchise, he nets less than $100 million or, where the league tanks, nothing at all? Players don't have to take the risk that their franchises could go into the cellars, owners do. As such, its unfair to take that into the equation as there are no guarantees in this world.

I don't like the idea of any single employee making more than the company. In that vein, I think that weighing NBA players against other entertainers is a poor comparison. I think a better one lies in the tech industry - think Steve Jobs and Bill Gates. Without Steve Jobs and Bill Gates, Apple and Microsoft, respectively, would be useless (no apple new age in the late 90s, no Windows from Gates). However, despite his value to the company, does Steve Jobs (taking into account both annual salary and annual increase in the value of his % of the company) make more than Apple profits annually? No. Does Bill Gates make more (in annual salary and annual increase in price of stock) than Microsoft does as a company? No.

The NBA is the only example I can think of where a thriving company exists but where a single employee still makes more annually than the company does. Just seems to me that if Michael Redd made $15 million last year, the Bucks should make at least that or more and definitely shouldn't be in the red.
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PostPosted: Mon Jun 20, 2011 5:56 pm    Post subject:

activeverb wrote:
composite wrote:
I was wondering about how owners have convinced the public about salary disputes. I think players have an uphill battle w/ public opinion. At the end of the day, they "play" a child's game which everyone can participate. They're not building a company like Microsoft or engaging in some other activity where the public "respects" the income made by the participants. They're simply playing a child's game that we all participate, they're just much better at it than most people. For most people, it's hard to believe that they should be paid so much $$ for that.




Based on this reasoning, JK Rowling shouldn't make so much money from the Harry Potter books -- after all, she's just writing words on paper, which most of us can do in elementary school. The money should go to the publisher, because they wear suits and go to an office everyday!

Based on this reasoning, Jerry Seinfeld shouldn't make much of the money if he sells out Staples for a concert. After all, he just tells jokes -everybody can tell a joke.

And why should Lady Gaga make money off her records. I was singing in grade school too. Anyone can sing. In fact there are more people who can sing than can dunk a basketball.

It's funny that sports fans happily pay all these money, in one way or another, to watch players play, and yet they think the money should go to someone other than the players who are entertaining them.


I'm not justifying it. I'm just calling it like it is. You never hear people say, "Y'know, I can't believe Warren Buffett makes over $100 million per year for just picking stocks..." Or the same about Lady Gaga, or Jerry Seinfeld. It's like the god-given gift of intellect, singing or comedy is somehow more "deserved."

But people say that ALL the time about sports athletes. ALL the time. As if playing sports somehow shouldn't be worth billions of dollars. And yet, people pay to watch that - whether live or on television. ESPN is by far, Disney's most valuable asset right now.

But it makes athletes' battles in public opinion more difficult to win.
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PostPosted: Mon Jun 20, 2011 7:38 pm    Post subject:

LakerSanity wrote:
But doesn't it seem a bit jarring that a single player can take home more money each year than the franchise does as a whole? If Kobe made $20 million last year and the entire Lakers' franchise made $20 million, does that seem fair? Especially considering that not all of that $20 million goes to Dr. Buss, but his partners as well?


You insist on analogizing this to an conventional employment relationship. The Lakers do not create a product. The players are the product. The fans don't pay money to see Dr. Buss. They pay money to see the players. Dr. Buss is the organizer. Kobe and the other players are the entertainers.

Microsoft customers don't pay money to see Bill Gates. They buy a product that is produced through the efforts of a great many people. Whether we're talking about Kobe or Oprah or U2 or Johnny Depp, the logic that applies to ordinary employees does not apply to entertainers.

Anyway, if the NBA operated under a free market system with no CBA, what would be free market say that Kobe is worth? It's more than $20M. The CBA didn't force anyone to pay Kobe an excessive salary. It keeps them from paying him even more. The CBA is about protecting the owners from themselves, not about protecting the owners from the players.

So the Lakers only made $20M last year? If so, that's because Dr. Buss elected to spend a ton of money on salaries and luxury tax. No one forced him to do that. On the contrary, the owners want to stop Dr. Buss from doing that.

Anyway, what would be "fair" about a system that protects the owners from competition and depresses player salaries to a fraction of what they could get in a competitive market?
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PostPosted: Mon Jun 20, 2011 7:59 pm    Post subject:

I think you missed my point with Bill Gates. What it comes down to is I just don't think the way you visualize the NBA to work is a business people would buy into to make a profit. Rather, the way the system is set up, is to have owners practice a hobby. That's not the way a business should run.
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